The Insidious Economic Impact of Sexual Harassment

Executive Summary

Up to 85% of women report that they have been sexually harassed at work, and 80% of them leave their firms within two years. Many even change industries. We know this imposes an economic cost on them, but what’s the larger cost to all of us? As talented women are pushed into starting over again, industries lose their ideas and expertise. And ideas are what drives today’s economy. The Economist has said that “new ideas are getting hard to find.” But what if actually, we’re just limiting who gets to have ideas? Systemic sexual harassment mean that women and their ideas are disproportionately chased away. That’s not something that companies — or countries — can afford.

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Up to 85% of women report that they have been sexually harassed at work, according to a 2016 report by the Equal Employment Opportunity Commission. What happens next is often not captured in numbers, but in the fine-print details of recent media reports. Whether the industry is media, entertainment, politics, technology, or something else, these women say things like: “I quit.” Or, “I left that place.” Or “maybe I shouldn’t be in [this industry]”. Some women scaled back on their ambitions, while others left companies or their chosen industry altogether.

Reading these many stories, over the last few months, made me reflect on my own exits. After a senior law enforcement official chased me around a hotel room while we both served on a statewide board for community colleges, I left the education field. I went into the tech industry, where I saw firsthand that male executives preferred to promote the ideas and innovations proposed by the female colleagues they happened to be having sex with. (And, moreover, having sex with in the office – I saw that firsthand, too, though I wish I could unsee it). I left that industry, too, becoming an independent consultant and advisor. Then, after hearing too many young women’s stories of venture capitalists who asked for sex in return for funding, I stepped back from participating in the startup ecosystem, the driving economy of Silicon Valley. I had never thought of sexual harassment as affecting my career arc, and yet I can now see how its friction surely influenced it.

While each woman’s harassment story is different in particulars, together the vignettes add up.

Obviously, each individual diminishes her earning power as she starts over. And collectively, this rash of exits is one reason that women as a group haven’t advanced to the highest levels of power in any industry. Research supports what these anecdotes suggest: according to data collected by sociologist Heather McLaughlin and others, about 80% of women who’ve been harassed leave their jobs within two years.

But it’s only when we squint at the stories, the more insidious economic story becomes visible. Which is this: as people drop out, opt out, and tune out of their chosen fields, it affects the whole economy. It’s the missing female Harvey Weinstein who never got a chance to shape the full range of stories of our society. It’s the female Charlie Rose who never got a chance to earn the power and influence associated with that role. And moving away from the hypothetical, it’s the Susan Fowlers and Ellen Paos who didn’t get to build the companies or make the investments that offered the new solutions that society most desperately needs.

The development of new ideas is what allows economies to grow richer year after year. This is especially true in the modern, digital, social economy: ideas are essential for growth, innovation, and ultimately prosperity. Power can either liberate or limit ideas. Too often, ideas are considered or dismissed based on who contributes them, and how powerful the person—not the ideas themselves—are.

Just as recently as September, The Economist reported that “new ideas are getting hard to find.” Robert Gordon and other notable economists’ quotes show that America’s economic boom is now behind us, as the productivity of new innovators and innovations to market have tumbled.

Those economists seem to think we’ve run out of ideas, but I’m wondering if it’s something else. Could it be that institutionalized patriarchy – the system in which men predominantly hold the power and women are largely excluded from it – is itself the key turnstiles, slowing economic progress? Could it be that many women’s contributions are blocked by those currently are in charge? Could it be that women are gaslighted into believing their ideas aren’t as worthy? And that men’s mediocre ideas are artificially elevated, rewarded and celebrated? Surely there’s an economic impact in all of that. While researchers have attempted to quantify the economic cost to individual women of being harassed, we may never be able to fully quantify the total economic cost to all of us – just as we can’t quantify the total costs to human prosperity of racism or other systemic discrimination.

But it’s only logical that as sexually predatory behavior goes on and is covered up, some people get to contribute their ideas, while others don’t. And we all pay the price. Because the key inference here is not about how one person feels or that people are being treated wrongly – important issues, surely — but that the system itself is the limiting gateway for our ideas, growth, and prosperity.

In the coming months, I predict that there will be a discussion on how “fair” it is that men lose their jobs for this conduct. The headline will likely read, “Claims of sexual harassment have gone too far”. After all, that person will argue, the harassers are (overall) good people who do (generally) good and valuable work. As you hear those backlash arguments, I want you to stop and ask yourself something: how “fair” it is that women have been essentially (and sometimes quite literally) chased out of their ability to contribute? We can see the effect of men losing their jobs, but that’s only because women have already been rendered invisible, before their ideas even had a shot. Just because you can’t see that, doesn’t make the loss to society and our economy any less real.

Seeing this bigger picture changes the call to action.

Instead of thinking of sexually predatory behavior as a few (or many) bad seeds, we ask, instead… how do we change our organizations to rebalance power? In the near-term, companies could improve reporting procedures so transparency and crowdsourced data could make the “whisper network” visible. A change in legal defaults to make settlements public would make it possible to see patterns. This, in turn, would make companies and their boards more accountable to the marketplace.

This is a bottom-line issue, in addition to being a human dignity issue. If only a few ideas are seen and valued, the wealth of a broader set of ideas is lost. While there’s a lot of attention economically on “the race against the machine”, we’re only now paying attention to the more enduring race affecting our economy in parallel: the skirt chase around the conference table. The question of what is created depends on who has a place at that table. And that is the problem, and the opportunity, that needs to be acted on.